Employees working for a foreign government or an international
organization in the U.S. are subject to some special tax rules. The tax
treatment of their compensation can vary according to whether the
employee is a U.S. citizen, a dual citizen, a green cardholder (lawful
permanent resident), or a foreign citizen without a green card.
If you are a U.S. citizen working in the U.S., you must report
self-employment income under the Self-Employment Contributions Act
(SECA). Self-employment tax is computed on Schedule SE, Self-Employment Tax, and reported on page 2 of the Form 1040.
U.S. citizens working in the U.S. must pay self-employment tax
because the foreign government or organization is not liable for the
employer’s portion of the contribution to the U.S. system. However, you
are not “self-employed” for any other federal tax purposes. You may not
claim deductions for expenses on Schedule C and are not qualified to
establish a Simplified Employee Pension (SEP) Plan and there is no
allowable deduction on line 28 of Form 1040 for contributions to any
such plan. Rules of contributing to SEP/IRA plans are explained in IRS
Publication 560, Retirement Plans for Small Business, and Revenue Ruling 73-384 for additional information.
You may also claim deductions for unreimbursed employee business
expenses arising from your employment on Form 2106, Employee Business
Expenses. The deduction is claimed on line 21 of Schedule A, Itemized
Deductions, on the Form 1040. These expenses are miscellaneous itemized
deductions subject to the 2 percent of adjusted gross income limitation.
To jump directly to any section in your TurboTax program, just go up to the TurboTax Search Bar (it may say "ask a question") and type in what you are looking for (i.e. self-employment tax), then press your enter key. A drop-down list will appear with various links to documentation on the subject, but most important, first on the list it will say "Jump Directly to (your subject)" select that and you will be taken to that section in the TurboTax interview process.
